Fiscal Law

[Peter Pedant]

Not so hypothetical

A husband leaves an estate of £50k to the grieving widow,
and the question is - what is the IHT allowance that is passed on ?
Is it 322k...... 322k minus 50k ..... or 50k ?

thanks

[factor-fiction]

I always understood that it was still the full IHT allowance (£325K) that gets passed over, giving an allowance of £650K to the widow/widower

[factor-fiction]

http://www.hmrc.gov.uk/inheritancetax/intro/transfer-threshold.htm

[factor-fiction]

An extract:

How does the transfer work?
Everyone's estate is exempt from Inheritance Tax up to a certain threshold: £325,000 in 2013-14. This threshold is also known as the 'nil rate band'.
Married couples and registered civil partners are also allowed to pass assets to each other during their lifetime or when they die without having to pay Inheritance Tax. It doesn't matter how much they pass on - as long as the person receiving the assets has their permanent home in the UK. This is known as spouse or civil partner exemption.
If someone leaves everything they own to their surviving spouse or civil partner in this way it's exempt from Inheritance Tax. It also means they haven't used any of their own Inheritance Tax threshold or nil rate band. This can be used to increase the Inheritance Tax threshold of the second spouse or civil partner when they die - even if the second spouse has remarried. Their estate can be worth up to £650,000 in 2013-14 before they owe Inheritance Tax.
To transfer the unused threshold, the executors or personal representatives of the second spouse or civil partner to die need to send certain forms and supporting documents to HM Revenue & Customs (HMRC). HMRC calls this 'transferring the nil rate band' from one partner to another.

[Buenchico]

Quote:
"The size of the first estate doesn't matter. If it was all left to the surviving spouse or civil partner, 100 per cent of the threshold was unused. You can transfer the full percentage when the second spouse or civil partner dies even if they die at the same time"

Source:
http://www.hmrc.gov.uk/inheritancetax/intro/transfer-threshold.htm

So the full allowance (of £325k) is passed on.